MARKET CLOSE: Shares fall; Nuplex, Skellerup lead decline

Thursday 23rd April 2009

Shares fell, pushing the NZX 50 Index down for a fourth day, as the International Monetary Fund’s forecast for a global slump this year weighed on equity markets. Nuplex Industries and Skellerup Industries led the decline.

The NZX 50 fell 4.09, or 0.2%, to 2658.84, the lowest in a week. Within the index, 27 shares fell, nine rose and 14 were unchanged. Turnover was NZ$69.7 million.

Nuplex slipped 8.3% to 33 cents after its rights issue, which was almost fully subscribed, raising NZ$127 million. Underwriter First NZ Capital made up the 4.09% shortfall. Managing director John Hirst today said Nuplex “is a profitable company with strong cash flow” that stands to deliver “superior profits when demand returns to more normal levels.”

Skellerup fell 3.7% to 52 cents. Demand for the company’s technical polymer products remains very weak and isn’t expected to recover in the short term, according to Forsyth Barr analyst John Cairns, the ShareChat website reported.

Cavalier dropped 2.9% to $1.65. The IMF said the global economy will probably shrink by 1.3% this year, the worst slump since WWII. Growth would return in 2010, with a global expansion forecast at 1.9%, it said. The IMF report “emphasizes how grim this year is expected to be,” said Barry Lindsay, research manager at First NZ Capital. Still, “investors are now looking beyond this year. The key is the outlook and the reality of recovery in 2010.”

Fisher & Paykel Appliances jumped 4.6% to 46 cents, trimming its slide this year to 67%. The manufacturer has a short-term debt facility of $80 million coming due on April 30, driving speculation it will seek fresh capital. Today, managing director John Bongard said the company is in discussions over its refinancing arrangements.

he $80 million “will be repaid from the proceeds of a refinancing of the total bank debt of the Appliances Group,” he said.

Among other companies that have tapped investors for more capital, Fletcher Building slipped 2.1% to $6.14 and Freightways slipped 2 cents to NZ$2.66. Sky City Entertainment, which this week raised $185 million selling shares to institutions at the top end of its bookbuild range, fell 4 cents to $2.75 today.

“They are all strengthening their balance sheets,” First NZ’s Lindsay said. That creates a short-term “headwind” for the market but offers investors more prospects that they can survive. Long-term it’s all for the better.”

New Zealand Refining fell 4 cents to $6.91. Chairman David Jackson told shareholders at their annual meeting today that margins may come under more pressure as demand for transport fuel weakens and refining capacity increases worldwide.

“The high margins we have enjoyed over the last three to four years are no longer the current reality,” he said.

Australia’s Lion Nathan was halted from trading, having last changed hands at $10.60 in New Zealand. Kirin Holdings, Japan’s largest beverage company, is in talks to acquire the remaining shares in 46.1%-owned Lion, according to a statement today.

Rival brewer Fosters Group climbed 6.6% to A$5.17 on the S&P/ASX 200 Index today, as the Kirin talks stoked optimism about valuations across the industry.

Businesswire.co.nz

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